Correlation Between Eisai and INDOSAT B

Can any of the company-specific risk be diversified away by investing in both Eisai and INDOSAT B at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eisai and INDOSAT B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eisai Co and INDOSAT B , you can compare the effects of market volatilities on Eisai and INDOSAT B and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eisai with a short position of INDOSAT B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and INDOSAT B.

Diversification Opportunities for Eisai and INDOSAT B

0.62

Correlation Coefficient

Eisai  INDOSAT B

Poor diversification

The 3 months correlation between Eisai and INDOSAT is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT B and Eisai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eisai Co are associated (or correlated) with INDOSAT B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT B has no effect on the direction of Eisai i.e., Eisai and INDOSAT B go up and down completely randomly.

Pair Corralation between Eisai and INDOSAT B

Assuming the 90 days horizon Eisai Co is expected to under-perform the INDOSAT B. In addition to that, Eisai is 2.03 times more volatile than INDOSAT B . It trades about -0.13 of its total potential returns per unit of risk. INDOSAT B is currently generating about -0.07 per unit of volatility. If you would invest  16.00  in INDOSAT B on September 27, 2024 and sell it today you would lose (1.00) from holding INDOSAT B or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eisai Co  vs.  INDOSAT B

Eisai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eisai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

INDOSAT B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, INDOSAT B is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eisai and INDOSAT B

The main advantage of trading using opposite Eisai and INDOSAT B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai position performs unexpectedly, INDOSAT B can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in INDOSAT B will offset losses from the drop in INDOSAT B's long position.

The idea behind Eisai Co and INDOSAT B pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.